UnitedHealth earnings slip but beat expectations

UnitedHealth Group’s second-quarter earnings slipped 2 percent on a rise in taxes and other expenses, but the nation’s largest health insurer still trumped analyst expectations.

The Minnetonka company also raised the low end of the earnings range it forecasts for this year.

UnitedHealth said revenue gains, particularly in its Medicaid business and through its Optum segment, helped counter the expenses during the quarter that ended June 30. Medicaid is the state-federal program that covers the poor and elderly.

UnitedHealth’s enrollment in that segment jumped nearly 19 percent to about 4.7 million people compared with last year’s quarter, as the insurer expanded its business and reaped gains from the health care overhaul, the massive federal law that aims to cover millions of people.

While the overhaul gave insurers more customers through a coverage expansion that started this year, it also heaped costs on their balance sheets, including an industrywide tax that is nondeductible. UnitedHealth said its provision for income taxes in the second quarter jumped 25 percent to $989 million.

Overall, the insurer earned $1.41 billion, or $1.42 per share, in the quarter. That’s down from $1.44 billion, or $1.40 per share, in the 2013 quarter, when it had more shares outstanding.

Revenue rose 7 percent to $32.57 billion.

Analysts expected, on average, earnings of $1.26 per share on $31.9 billion in revenue, according to FactSet.

Health insurance is UnitedHealth’s largest business, but it also has seen growth from its Optum segment, which sells information technology services and perform pharmacy benefits management. Optum’s operating earnings jumped 23 percent to $728 million in the quarter.

UnitedHealth now expects 2014 earnings to range between $5.50 and $5.60 per share. That compares to its previous forecast for $5.40 to $5.60 per share. It also raised its revenue estimate to $130 billion from $128 billion to $129 billion.

Analysts predict, on average, earnings of $5.52 per share on $128.38 billion in revenue.